Orbital ATK Investors Fuming Over Northrop Grumman Merger

(CN) – Investors claim in a class action that they’re being kept in the dark about the $9.2 billion merger of Orbital ATK Inc. with fellow defense contractor Northrop Grumman.

Lead plaintiff Stephen Simnowitz filed suit in the U.S. District Court for Eastern Virginia alleging violations of the U.S. Securities Exchange Act.

On Sept. 18 Orbital and Northrop announced the acquisition where Orbital investors will receive $134.50 per share in cash.

Filings made on Oct. 2 with the Securities Exchange Commission, however, are “false and misleading,” according to the complaint, because they omit Orbital’s management’s projections used by the company’s financial provider Citigroup, the valuation analyses prepared by Citigroup for its fairness opinion, and Orbital insiders’ potential conflicts of interest.

Investors accuse Orbital’s board members of engaging in a single-bidder process with Northrop as a long-standing customer. “Despite receiving interest from potential purchasers, in this instance the board failed to conduct even a limited market check before agreeing to the proposed transaction,” the complaint states.

The lawsuit further accuses Oribtal’s top executives, namely CEO David W. Thompson and other directors and executives, of looking out for their own interest over that of investors by securing millions in compensation upon the deal’s expected close in the first half of 2018.

Investors, seeking to halt the acquisition, are represented by Charles L. Williams and James C. Skilling of Williams & Skilling PC in Richmond, Va., and Thomas J. McKenna and Gregory M. Egleston of Gainey McKenna & Egleston in New York.